Home buyers and homeowners may be getting spooked by higher mortgage rates. Mortgage applications for both home purchases and refinancings plummeted 6.6 percent last week on a seasonally adjusted basis compared to the previous week, the Mortgage Bankers Association reported Wednesday.

Volume is now just 3.5 percent higher than a year ago, with annual increases continuing to shrink week to week.
Applications to refinance dropped 7 percent last week but are still 2.8 percent higher than a year ago. Applications to purchase a home dropped 6 percent last week and are 3 percent higher than a year ago.
Affordability is weakening as home prices continue to rise. Mortgage rates also are now more than half a percentage point higher than at the start of the year.
“The drumbeat continues,” says Mike Fratantoni, the MBA’s chief economist. “Inflation is increasing, as are deficits, and the economy and job market continue to look strong, and rates are higher as a result. This upward move in rates is coming right at the start of the spring buying season and is a headwind.”
The 30-year fixed-rate mortgage averaged 4.64 percent last week, the highest level since January 2014, the MBA reports.
More borrowers are turning to adjustable-rate mortgages, which tend to have lower initial rates than the 30-year fixed-rate mortgage. However, the lower rates from an ARM can be risky since the rates are locked in for a shorter term. ARM applications rose to 6.4 percent of total applications last week.

First-time home buyers are entering the market under tight inventory conditions and rising home prices. But not all cities are posing a challenge for those looking to break in to homeownership.
A new study by LendingTree ranks the top cities for first-time home buyers in the nation’s 100 largest cities. They factored in average down payment amounts, the share of buyers using an FHA mortgage, the share of homes sold that the median income family can afford; and more.
First-time home buyers in Little Rock, Ark.; Birmingham, Ala.; and Grand Rapids, Mich., topped LendingTree’s list as best cities for first-time home buyers in 2018. Both Little Rock and Birmingham have low average down payments of just 12 percent or $24,896 and $27,000, respectively. Grand Rapids proved to be the best place to be an FHA borrower (59 percent).
On the other hand, LendingTree found in its analysis that Denver, New York, and San Francisco ranked as the most challenging cities for first-time buyers.
These 10 cities ranked at the top for first-time home buyers:
1. Little Rock, Ark.
2. Birmingham, Ala.
3. Grand Rapids, Mich.
4. Youngstown, Ohio
5. Winston, N.C.
6. Dayton, Ohio
7. Indianapolis
8. Scranton, Pa.
9. Pittsburgh
10. Cincinnati

View the full top 100 rankings and a breakdown of each data point analyzed for each city at LendingTree.
Source: LendingTree

With the backing of Fannie Mae, home-sharing giant Airbnb has announced a new partnership with select lenders, including Quicken Loans, Citizens Bank, and Better Mortgage, that will allow homeowners to report rental earnings as part of their income when applying to refinance a mortgage. Owners who rent rooms on Airbnb had been facing delays, higher interest rates, and loan limitations when refinancing.
“This initiative was developed to identify new ways of recognizing home-sharing income, making it possible for homeowners to maximize their investment to better reach their financial goals,” Airbnb said in a statement. “The project is part of Fannie Mae’s work to find new, innovative ways to expand the availability of affordable mortgage credit.”
If the initial program goes well, Fannie Mae may consider extending it to all of its lenders, according to reports. Airbnb will provide hosts with a proof of income statement that they can use when refinancing an existing mortgage.
Housing studies show mixed results when it comes to the effect of Airbnb on local markets. Some show that a greater number of Airbnb listings in a given location can lead to a slight increase in rents and home prices. Others, however, suggest Airbnb restricts long-term rent growth. Some cities, such as Baltimore and Detroit, are considering new zoning requirements to limit Airbnb rentals in its communities.
Source: Airbnb and “Refinancing a Mortgage? You Can Now Count Airbnb Income,” Curbed.com (Feb. 9, 2018)

Utility companies will pay less tax from a recent tax overhaul, and many are planning to pass those savings on to customers. Rate changes may shave a few dollars off the average customer’s bill in the coming months, The Wall Street Journal reports.
The federal government slashed its corporate tax rate from 35 percent to 21 percent. Regulated gas and electric utilities will have to pay less tax, and some state authorities may give regulated utilities little choice but to return that tax savings to its customers, WSJ reports.
Some regulated utilities will be refunding some of the tax payments they collected from customers based on the 35 percent rate. Companies may choose to issue refunds over several years, so the savings may be minimal for customers.
For example, National Grid U.S., a utility holding company with subsidiaries in New York, Massachusetts, and Rhode Island, expects a non-cash tax credit of $2 billion in 2018 from the lower tax rate. “It’s going to be returned to customers over a period of 20 to 30 years,” Peggy Smyth, the company’s finance chief, told The Wall Street Journal.
Some companies are using the tax savings to defray higher costs and prevent having to hike bills. For example, Florida Power & Light said it plans to use its savings to pay for $1.3 billion in recovery costs from Hurricane Irma. Customers may not see any reduction in utility bills, but it will spare them from any increases, the company said.
Duke Energy Corp, with subsidiaries in North Carolina, is in the process of requesting permission from local authorities to cut retail rates or use its tax savings to defray the cost of storm-related recovery efforts, WSJ reports.
“Tax reform has presented us a unique opportunity to reduce customer bills in the near term, while also helping to offset future rate increases,” says Steven Young, Duke Energy’s finance chief.

Very nice home with numerous recent updates that include: roof, siding, windows, furnace, hot water heater, 150 amp electrical service, kitchen, both bathrooms, flooring (including new hardwood on the main and refinished on the upper level), paint, fixtures, doors and more. The owners are currently using the lower level rec room as a third bedroom. The back yard has an insulated 2 stall garage with an attached screen house for entertaining. All of the vitals have been taken care of and this home is in absolute move-in condition. The sellers are motivated and will consider all offers.

Mortgage rates are steadily rising, and some housing analysts are already forecasting an impact on the market from the higher borrowing costs.
Heading into the spring buying season, the supply of homes remains at record lows, which presses home prices higher throughout the country. But as buyers face higher mortgage rate costs, will that prompt them to pause?
Mortgage rates were near record lows for most of 2017, but they’ve been on the rise ever since the new year. The average rate on the popular 30-year fixed-rate mortgage is up a quarter of a percentage point since the first week of the year, and rates have increased for the past four consecutive weeks. Freddie Mac reported last week the average on a 30-year fixed-rate loan was 4.22 percent. (Read more: Fed Move Doesn’t Suppress Mortgage Rates)
As the Federal Reserve prepares to raise its benchmark rate in the coming months, mortgage rates are expected to move higher, too. Mortgage rates are loosely tied to the yield on the U.S. 10-year Treasury.
Some homeowners may be less inclined to sell because they don’t want to lose their current record low rates that they secured after the recession. Some buyers, however, may want to move faster before rates rise even more and they face higher prices.
Lawrence Yun, chief economist of the National Association of REALTORS®, predicts that mortgage rates will reach 4.5 percent by the second half of the year.
Some home shoppers may be in a rush to lock in rates before those edge up even more.
“The increases that we’ve seen so far have only gotten people off the couch and into the market,” Glenn Kelman, CEO of Redfin, told CNBC in late January. “People are worrying that they need to hurry and buy a house now before rates go up further.”